Opinion: Reviving the Green Deal

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bill wright

As the first Green Deal Communities energy-saving schemes get underway, Bill Wright, head of energy solutions at the Electrical Contractors’ Association (ECA), looks at progress to date on this major Government initiative.

The Green Deal promised to help householders and businesses cut their energy bills and play a key role in achieving the UK’s highly ambitious energy emissions targets. In the build up to its launch in January 2013, politicians and the construction industry alike were optimistic about its impact and the opportunities it would bring.

As early as last September, however, the government realised the initiative was failing to excite homeowners or housing professionals. In response, it announced £80 million of capital funding would be made available to local councils through Green Deal Communities. Successful bids would be those that could deliver Green Deal plans to as many households as possible - whether owner-occupied or rental - and demonstrate that complimentary energy companies obligation (ECO) funding had been secured.

The government received 64 Green Deal Communities bids from local authorities hoping to access this extended fund. And in March, it awarded £19.5m of this funding to six projects that will deliver over 5,500 Green Deal plans to more than 7,000 households.

These ‘whole-street’ energy efficiency improvements are in Cambridgeshire, Ashfield, Suffolk, Peterborough, Haringey and Bracknell Forest. Further projects are being assessed and the Department for Energy & Climate Change (DECC) is expected to announce the next tranche of successful projects shortly. DECC justifies the slow uptake of the Green Deal by saying the scheme is a long term initiative; it admits that it will need to adapt over time with the energy services market, and as consumer attitudes to energy efficiency change.

However, it also recognised that changes needed to be made, resulting in early improvements that have included the simplification of Green Deal Finance Company documentation and a promise to speed up processes through which Green Deal providers are approved.

The second quarter of this year should see further enhancements to the Green Deal, with forthcoming legislative change expected which will make it clearer that landlords and tenants can - and should - benefit from the Green Deal. But what else can government do?

Cut interest rates

One factor that I think has contributed to low levels of take up has been the costs involved with the Green Deal. As well as assessment costs, Green Deal loans have annual interest rates of seven per cent, an off-putting figure for any property owner or tenant, especially in the current climate.

As a priority, annual interest rates on the loans need to be cut. The German initiative that the Green Deal is based on has rates of between one and two per cent, a much more appealing figure compared to our rate. There is no question; if the Green Deal interest rate in the UK was reduced in line with the German version, the Green Deal would become more attractive.

Extend the ‘Golden Rule’

Increasing the number of active measures covered by the ‘Golden Rule’ could also help people to take advantage of the initiative, something Edward Davey conceded at Eco Build. Feed in Tariffs (FiTs) should be included, for example, as this would mean the vast majority of the cost of installing solar panels would be covered by the Green Deal. As solar panels have a high installation cost - but also a high return on investment - bringing them fully under the Green Deal would encourage more people to invest in them.

Cut taxes

There is also a lack of tangible incentives to join the scheme. At present, there is no compelling reason to take part in the Green Deal. But cutting council tax would surely stimulate enthusiasm for the programme.

Significant Green Deal uptake is still possible across the public and private sectors if there is a clear financial benefit from making properties more energy efficient, and if funds are provided at a fair repayment rate. This initiative has tremendous potential to make a real difference to local authorities in the way that they run the public buildings they are responsible for, as well as the social housing that comes under their remit, and so to the UK’s energy efficiency goals.